Chinese web firms are ‘bullying’ customers with data and algorithms, says country’s consumer watchdog

Chinese internet companies have been violating customers’ rights by misusing personal data and “bullying” people into purchases and promotions, a government-backed consumer association said on Thursday.

The statement from the China Consumers Association (CCA) did not name any companies, but comes as Beijing has ramped up scrutiny of technology giants, reversing a once laissez-faire approach towards its vast internet space.

“Consumers are being squeezed by data algorithms and becoming the targets of technical bullying,” the association said.

Companies must stop using systems to scan through consumers’ personal data and offer them different prices for goods based on that information, the association said.

Another problem the watchdog highlighted was the use of personalised and targeted recommendations, achieved via monitoring the consumption patterns and browser histories of users, the watchdog said.

The problem with that, according to the association, is that consumers might not realise that the content they are viewing has been tailored for them and is different to what other users can see, which could mean they do not have access to all the information they need to make a well-informed purchase decision.

Some of the products, services and content that are recommended by platforms are also “against the law, public order and good customs,” the watchdog said without elaborating.

Recommended products and services on online platforms should be “comprehensive and objective”, and targeted recommendations should not replace full public information prior to purchase, the association said.

Targeted advertising, which is achieved by gathering a large swathe of user data, is a common business model for many online platforms, but it is drawing criticism from Beijing as authorities look to bolster user privacy and data protection.

Last month the Shanghai consumer council admonished Tencent’s WeChat for not allowing users to easily disable targeted advertising. China’s new draft personal information protection law also mentions that users should be entitled to reject “automated decision making” that is based on their personal information.

“From the consumer data privacy perspective, companies should embrace transparency – clearly communicate with consumers how their data will be collected and used,” said Xiaofeng Wang, a research analyst at Forrester. “[They should also] adopt granular consent, allow customers to only authorise partial data to complete a specific task, in a certain period of time, or at a specific location.”

The watchdog also suggested that China should have an institution that focuses on regulating “the ethics of algorithms”, warning that disorderly development in this area could harm fair competition.

“In the field of online consumption, certain unfair uses of algorithms are technical and covert, and are subtly exerting influences over the purchase decisions of consumers. It is hard for consumers to challenge that with their individual powers,” the watchdog said.

The watchdog’s recommendations come hot on the heels of draft rules from Beijing in December aimed at preventing monopolistic behaviour by internet companies, marking China’s first major regulatory move against a sector that has enjoyed largely unfettered growth and development.

China also warned its internet giants to brace for increased scrutiny, as it slapped fines and announced investigations into deals involving Alibaba Group Holding and Tencent Holdings.

Meanwhile, Chinese state media has become increasingly vocal about infringement of consumer rights by tech companies. Last year, in a series of commentary articles run by state media outlet People’s Daily, internet companies were accused of “bullying” users and violating their rights in the form of browser hijacking and asking for excessive app permissions.

In September, state broadcaster CCTV published the results of a poll which showed that 75 per cent of respondents believed they had been treated unfairly when making online purchases.

Alibaba owns the South China Morning Post.